Sources: Shi'ite rebels, tribes agree ceasefire in north Yemen

Shi'ite Muslim rebels and Sunni tribesmen agreed a local ceasefire in northern Yemen on Tuesday after clashes between the rivals killed about 60 people there last week, tribal sources said.

Tribal sources told Reuters on Tuesday the truce, mediated by the mayor of the capital Sanaa, stipulated that fighters from both sides withdraw from the area and let the army deploy.

The fighting is just one challenge facing U.S.-allied Yemen, where authorities are struggling to shore up control in the face of internal conflicts, poor governance and poverty.

The stability of Yemen, which neighbors top oil exporter Saudi Arabia, is of major concern to the West which is worried about the repercussions of a complete breakdown in security in Yemen, home to al Qaeda in the Arabian Peninsula.

On Sunday Shi'ite Houthi fighters and their allies from the Hashed tribal federation seized control of al-Khamri, a region in Omran province associated with the powerful al-Ahmar clan, an ally of Salafis, adherents of an austere brand of Sunni Islam.

The latest fighting was the worst since clashes began in October when Houthi rebels, who hold much of northern Saada province on the Saudi border, moved against Salafi forces in Saada's Dammaj town. The Houthis accused the Salafis of recruiting foreign fighters to attack them.

Underscoring the growing instability in Yemen, a bomb targeting a bus carrying Yemeni soldiers in the capital Sanaa killed two people on Tuesday, a medical source said.

The blast was the latest in a series of security incidents to hit the country in less than a week. Two Westerners have been kidnapped since Friday and three explosions near the French embassy, the defense ministry and the central bank, shook the capital late on Sunday.

"I was far away from the bus and I suddenly saw a big explosion near the side where the driver sits," said Ahmed, a taxi driver.

"Six ambulances arrived and started transporting the soldiers, there was blood spilling everywhere," he said.